E7-21 (similar to) Question Help Smith Smith Enterprises manufactures tires for the Formula 1 motor racing circuit. For August 2017 2017, it budgeted to manufacture and sell 3 comma 100 3,100 tires at a variable cost of $ 77 $77 per tire and total fixed costs of $ 53 comma 500 $53,500. The budgeted selling price was $ 108 $108 per tire. Actual results in August 2017 2017 were 2 comma 900 2,900 tires manufactured and sold at a selling price of $ 109 $109 per tire. The actual total variable costs were $ 240 comma 700 $240,700, and the actual total fixed costs were $ 49 comma 500 $49,500. Read the requirements LOADING... . Requirement 1. Prepare a performance report that uses a flexible budget and a static budget. Begin with the actual results, then complete the flexible budget columns and the static budget columns. Label each variance as favorable or unfavorable. (For variances with a $0 balance, make sure to enter "0" in the appropriate field. If the variance is zero, do not select a label.) Actual Results Units sold Revenues Variable costs Contribution margin Fixed costs Operating income Enter any number in the edit fields and then click Check Answer. 3 parts remaining Clear All Check Answer
1. Prepare a performance report that uses a flexible budget and a static budget | ||||||||
Actual Results (Refer working note 1) |
Flexible Budget Variances |
Flexible Budget (Refer working note 2) |
Sales Volume Variance |
Static Budget (Refer working note 3) |
||||
(a) | (a- b) | (b) | (b - c) | (c) | ||||
Units sold | 2900 | 2900 | 3100 | |||||
Revenues | $316,100 | $2,900 | F | $313,200 | $21,600 | U | $334,800 | |
Variable costs | $240,700 | $17,400 | U | $223,300 | $15,400 | F | $238,700 | |
Contribution Margin | $75,400 | $14,500 | U | $89,900 | $6,200 | U | $96,100 | |
Fixed costs | $49,500 | $4,000 | F | $53,500 | $0 | $53,500 | ||
Operating Income | $25,900 | $10,500 | U | $36,400 | $6,200 | U | $42,600 |
.
.
Working note 1 - Actual results | |
Actual units sold (a) | 2900 |
Actual selling price per unit (b) | $109 |
Revenues (a x b) | $316,100 |
Less: Actual variable costs | $240,700 |
Contribution margin | $75,400 |
Less: Actual fixed cost | $49,500 |
Operating Income | $25,900 |
.
.
Working note 2 - Flexible budget | |
Actual units sold (a) | 2900 |
Budgeted selling price per unit (b) | $108 |
Budgeted variable cost per unit (c) | $77 |
Revenues (a x b) | $313,200 |
Less: Flexible variable costs (a x c) | $223,300 |
Contribution margin | $89,900 |
Less: Budgeted fixed cost | $53,500 |
Operating Income | $36,400 |
.
.
Working note 3 - Static budget | |
Budgeted units sold (a) | 3100 |
Budgeted selling price per unit (b) | $108 |
Budgeted variable cost per unit (c) | $77 |
Revenues (a x b) | $334,800 |
Less: Budgeted variable costs (a x c) | $238,700 |
Contribution margin | $96,100 |
Less: Budgeted fixed cost | $53,500 |
Operating Income | $42,600 |
E7-21 (similar to) Question Help Smith Smith Enterprises manufactures tires for the Formula 1 motor racing...
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